Airlines in a Crisis

Gei Karlsen, the CEO of Norwegian, learnt his airline craft during a wild expansion and is now looking to recreate that. Just before he announce a 17 mill euro profit for the summer season 2021, he announce 17 more planes for the fleet. At least he didn't pay extra to get the ExMax, for now but did say that that was an option for the future. He is also going to park a large part of the fleet during the winter months and is negotiating hard with the unions for some solution on what to do with the flying crews during that period. Will it be a long vacation or will it be halve the hours for everybody. The need to keep pilots current may play in here. But he didn't stop there. They day after the results he is hinting to that he want to expand further and think Norwegian can handle a fleet of 80 aircraft with the administrative staff they already have on board today. The parking will be helped financiall by some power by the hour deals for the winter season but maintenance will stil...

He recently announced that he had plenty of time before any further 737 orders where forthcoming saying that another world shock disruption would have to come first so he could again get preferential pricing. The ExMax was never such a gamechanger that Ryanair has been spreading about. 10% more seats than the 737-800 and slightly more effective engines do not give enough green credentials that it impresses any politician when everybody is dreaming about electric planes. And for Ryanair shareholders its just a few percentage points more potential profit for an increasingly short timeframe until something more drastically have to happen about the future of flying. Unless transport of people by air is to go into a permanent decline at the hands of the climate change brigade. It could also be that Ryanair has reached the long touted optimum sice of aircrafts, round 200. They are dividing into not only more marketing names but operations to. Or that the current top management have run out o...

Heard immunity and a reduction in inection was supposed to happen at 60% infection/vaccination. Now some countries are there but infection rates continue to rise.  New scenario; We need to be at 90% vaccination rate because the vaccines are at best 90% effective and with the latest virus version only 30% after first dose. And not at all in some that are immuno compromised. This could drag on. When 90% won't do it they will come with the 3'rd injection and what then. Will there be a 4'th and a 5'th and then annual boosters. This is the problem when there is no plan B as an alternative to vaccination. Or maybe vaccination was plan B and a plan C is just to much for politicians to think about.  At some stage we will have to live, or die, with the CoVid19 virus. It's a cold virus just like the 4 others that we have lived with for at least a hundred years. It's just we weren't that well informed when each of them first came around and killed left right and center...

Or rather can he survive without giving up his 11 million bonus. Or should the question be, will he, since it could take him 2 years to make it back. Question is how much does he want to be CEO or is it just the money that drives him. There is surely another company he could rescue from the brink through financial wizardry. Schram, the former CEO of Norwegian lasted 18 months. More because ofthe support of a weak board with litle shareholder backing but at the same time without any shareholder unity or even a strong such. And a chairman without much airline background that maybe of that reason picked a CEO without any at all. As soon as kind of new strong shareholders came in and the chairman that picked him for the CEO role was out, so was he. But is Karlsen what Norwegian needs now. When he came in as CFO he either had any airline background but was a part of the Fredriksen sphere. Fredriksen is again a large shareholder in Norwegian but the time for finanzial wizardry might be vanin...

If SAS is to reach that target they'll better quickly get a new CEO in that brim full of ideas can land running. We need to see skidmarks just like a plane. The cash of the company have in the last quarter reduced with more than halve. And their chances of borrowing more is not getting any better with Moody downgrading them from B3 to Caa1 and hints to an even more negative future.  Worse is they are expecting 20% in April and 30% in May/June. That can be difficult if one compares to last year when Europe didn't really open up before July. Add in the uncertain vaccine supplies and this summer could be a complete wash out. Notice all vaccine forecasts says that most is going to happen in the last month. That is a recipe for disapointment. There is still much to be said for freight. If passenger volumes is only going to be 50% that is a lot of missing belly capacity transcontinentally, and europe wide. Most international post is still at less than halve the speed it was pre-covid...

How many airline have ben supportive as governments around the world have tried to handle a worldwide pandemic crisis. Today KLM tried to force the retraction of the dutch governments demand of negative tests even for crew by threatening to stop all it's Transcontinental and even european flying that would demand a crew layover to not risk that a crewmember with a postitive test was left behind. A behaviour more akin to O'Leary trying to change tax hikes by dropping all routes from certain airports than a national airline having the word Royal in its name. Even coming with stories how they have to stop trans-shipping vaccines to countries in South America with tremendous Covid19 problems. Apart from the sudden concern over crew, that was lacking before, can't see why KLM couldn't operate flights with double, or treble or quarduple or whatever it takes, sets of crews so no crew leaves the plane or stays over and everybody comes back. To at least bring out the vaccines. M...

Gustafson in SAS has taken his hat and gone, to a different kind of business all together.  He has been controversial in recent years, How he received significant bonuses after getting other employes to reduce their renumeration packages in recent crisis did not help SAS when pilots went on strike a couple of years ago.  Maybe his greed got the better of him and he foresaw that for the coming years his performance bonuses would not mount up to much. Specially since most airline have negotiated multiyear CoVid19 reductions in the pay of staff and therefore will have problems restoring senior managment perks faster or significantly higher in this period. His share options and other renumeration schemes is also probably solidly underwater after the refinancing SAS went through in 2020. Resulting in any financial loss by leaving would be minimized.   What should SAS look for in their next leader.  First someone who can him/herself show moderation and not only demand...

Airlines is hoping a demand for certificate of vaccination for passengers will free up the travel world so people again can fly freely. Ryanair even advertising jab to fly. There are a couple of flies in the oinkment. With more than 7 billion people in the world and wealth extremely unevenly spread, at some stage there will be a cry for fairer distribution of the vaccines produced.  Several countries are already talking about not vaccinating people under 45 with no underlying health issue. We don't want fighting in the queue among all the others because airlines demand vaccination and eager travellers getting in front of they for whom the jab might mean the difference between actual life and death. As in contrast to just the financial health of the travel industry but not actual death for its owners and employers. There are certainly enough squabbling in the queue already with policeforces trying to get vaccinated before the nurses, fishermen before the elderly and doctors grabbing...

The main Low Fares encumbents ( = they with the Lowest Costs) in the European landscape are taking wildly different approaches to the first full winter of the CoVid19 pandemic.  Wizz is seeking opportunities where they appear and quickly moving into markets where the (semi) incumbent is in trouble. Sample in Norway where they have announced and quickly started their first domestic routes and announced even more to come when Norwegian went to the courts for protection. By the time any other seeking opportunities come looking post vaccine, Wizz will already have operated on the routes for more than 6 months. Ryanair on the other hand has spent the CoVid19 crying about different governments actions, and their response to pandemic changes is to kick the toys out of the pram and abandon routes and airports. Exactly as they used to do when an airport tried to introduce new charges. You haven't seen them really anounce an entry into any really new market, just adjusting frequencies in tho...

Norwegian did not spend the time well since the last injection of government loans. Too much concentration on finding finance too little on what makes an airline a viable business.  They could have gone for doing more cargo. If they by now transported halve of the Norwegian international post and a large portion of its exportable airfreight products if would have given the Norwegian government a reason for why the company needed saving.  They could have marked them out as bringing something extra to the CoVid19 table by, as the only airline in Europe, offering to transport the nervous in a socially distancing environment by at least offering the option of middle seat free in parts of the cabin. For 50% extra on the ticketprice off course. Then the politicians could have said look what Norwegian brings to the table, we need that, lets give them a helping hand.  Instead they decided to spend all their effort and most of their time in scouring for finance. Not easy to ...

A number of airlines in the US is practicing middle seat free on flights to provide some degree of social distancing. No airline in Europe have taken this aboard to try to improve the public confidence in that flying can be safe weven in pandemic times. Although Ryanair was once modelled on Southwest, it's leader have been outspoken on how unwilling they are on doing anything to placate its potential customers worries.. While Sothwest is practicing middle seat free and have promised its potential passengers to continue to do so. At some stage even European airlines will hopefully come to the conclusion that even bargain basement fares is not going to entice the large majority of the audience back to flying. And with the capacities they have built up they can't live on the 25% of the population that don't care and will travel anyhow and anyway. Even if they could bully governments to lift restrictions, they can't bully the nervous and wait and see majority of the pub...

According to frequent reports Ryanair has not managed to fit to CoVid19 their automatic seating algoritm that splits people on the same booking in the hope they will pay extra to sit together. This is a low even for Ryanair. They have in the last years upped their IT department with a factor of 10 and added dozens of programmers to have control over their systems. And still 6 months into a pandemic where every airline knows that only they on the same booking should sit together and everyone else should distance Ryanair management have not yet copped on. In addition at the same time they are seating non related and uknown people together it is reported they are laving some rows completely empty. Theis means they are not even trying to do anything to reduce contamination. It is time for some punishment and maybe the italians for once will be first already threatening a ban on Ryanair if they do not get their act together.

Hear again and again that if you want social distancing = middle seat free, then buy a first class ticket or more than 1 seat. Problem is there are no socially distancing first class on domestic and next to none on airtravel within Europe. And even if you buy the full 3 seats there are no guarantees that the airline won't fill the other 2 if only you shows up for departure. And social distancing should not cost double the price or more. At the most on a normal 3+3 row seat configuration it should be 50% more. It is this kind of naive thinking that is hindering airlines from taking potential passengers fear of CoVid19 seriously. And this fear affect halve of all thinking about flying during the pandemic. The airlines have built up so much capacity hey just can't survive on the 25% of us that don't care and will fly anyway. At the very least airlines should offer proper social distancing, aka middle seat free, as an option. It is time for them to wake up. They have jibbe...

Ryanair has done it again. Gone and dwcided that their hunt for profit is more important than peoples health and the world economy and taken the Irish government to court on a technicality in their handling of the CoVid19 pandemic emergency. It just show what type of selfcentered individuals runs Ryanair, and BA. They can really be compared with the landlords of old that sent their tenants away on coffin ships so they could exploit the land left behind for profit. Doesn't help that they try to pack it in with concerns about clarity or the freedom of the individual or as humanitarian and sympathetic. These are the same people that will only take pandemic precautions if it doesn't cost their own company anything. Others should provide the masks. Airports should do and pay for the temperature checks. Social distancing is to difficult a.s.o. And pushing the line that no advice is better than  unclear advice is just b****cks. Still waiting for what O'Leary's, and Wilson...

When it comes to utilizing the constantly changing nature of the CoVid19 crisis travel advices from diverce governments, startup airlines have a unique opportunity to take advantage. Where others are large and slow you will be small and flexible. As some pairings close others opens up. People are just booking short time out anyway so you don't have to publish a 6 month schedule. Many airlines take a week or 2 to react to government advisory changes. You should have it ready for booking by tomorrow. In addition most customer charter rules are temporarily suspended or not enforced so a 2 or even 1 week cancelling policy should be envoked. Cancel, refund and move your resources to a different route. As a new airline you are not lumbered with bookings done months ago that you want to fly to avoid refunding because you have spent the cash from them on paying for unused planes and other fixed costs.

It's not a crash / downturn / new normal for a business started now. They don't have a lot of parked planes they have to pay for or staff costs for people that have nothing to do, or now massively oversized other fixed costs for an airline 4 times what they are flying. Their start out cost base will be where other airlines are trying to get to through negotiating pay and lease reductions. And what for established airlines will just be a (partial) future return to normal will for them be a giant upswing. Add in a bit of what others can't do because it isn't like it used to be and you could be on to a winner. Something for CoVid19 times like optional social distancing through middle seat free. Flexible changes instead of outright refunds. Remember they don't have a massive presale either of seats that may or may not be taken up, so they should now that they who book now knows the pandemic story. New airlines now have a massive selection of used and new planes fro...

There are reports that some airlines have been light on aircraft maintenance during the CoVId19 lockdowns. This specially goes for they who have outsourced that maintenance and have done a light touch follow up. Since airfreight is still massively behind some airlines like, EasyJet, have found that parts are hard to come by now when everybody are ramping up their flying and all need the same parts at the same time. The situation isn't helped by that freight and especially airfreight is far behind normal operation. This has led to some airlines having to use their less fuel efficient planes insted of the newer and greener ones. Even if they have extras of the others in stock they just haven't been maintained to the standard required for an immediate return to service. Or even not so immediate since most airlines have had 2 to 3 weeks between announcing its uprated schedule to actually going live with it. It is ironic that planes can't get back in the air because planes ...

More of the fictive crew rental straw companies that Norwegian created are being declared bankrupt. Reasons given; client (= Norwegian) won't pay their bills. And this time it is really closing in on them being in their neighbouring countries Denmark and Sweden. This is going to end in tears. The management of Norwegian haven't solved neither the company finances nor its problems. They have just pushed them into the future. No other airline have tried to solve their CoVid19 problems by abandoning their legal responsibilities towards their employees. Whether they where hired directly or through fictive agencies. Fictive = the agency only supply staff to 1 company which is also the owner (or part owner) of said employment agency. Others have tried to abandoned their crew at other times. But those companies always had the financial strength to pay themselves out of trouble when it went legally tits up. Norwegian do not have the money to pay out if different countries start tak...

Many politicians in charge around the world are showing signs of CoVid19 fatigue. The number of previously daily press conferences are dwindling. Figures for the new infections and deaths are no longer daily. Less happens during the weekend. And the press are following suit. No longer are updates headline or given the most prominent space on the frontpages. But is that enough to un-scare the populations of these countries. Make them believe the immediate danger is really over even though they for months have been touted that this will take years until either a vaccine is implemented or enough of us are immune. Neither of which have happened, anywhere. And still the numbers for infected and new deaths are going up reaching ever higher daily numbers. Even in countries/states whit increasing numbers there seems to be a reluctance against new lockdowns with politicians only heeding positive results, ignoring negative and now following in many cases constructed re-infect rate numbers with...

The boardroom changes planned for Norwegian seems small compared to that the entire ownership structure have changed since the current board was chosen. Only 2 representatives from leasing companies that now owns a very large part of the airline. And only 1 other new board member. That is shockingly lazy work from the consultants hired in to assist in the process. But maybe not so unexpected since the same people where responsible for finding the new management just being put into action at the company. For an airline with only 8 planes flying they on the other hand certainly  have decided to reward the board handsomely for the coming year. One would hope the planned reduction from 3 to 2 weeks for notifications of emergency general meetings is a sign that other changes are planned in the near future by some of the soon to be elected members of either the board or the selection committee. Changes are needed, and quickly before the current management squanders on a hibernation ...